Assemblyman Wood’s prescription drug bills move forward

Assemblyman Jim Wood (D-Healdsburg) has introduced two prescription drug bills intended to cut down on drug costs, which passed their first committee hearings on Tuesday.

One would prohibit the use of drug manufacturer coupons for brand name drugs when there is a generic brand available, approved by the Assembly Health Committee. And the other would regulate pharmacy benefit managers, which are currently unregulated, pushed through by the Assembly Business and Professions Committee.

“Today was a good day for consumers,” Wood said in a press release, himself a health care provider and chairman of the Assembly Health Committee. “Pharmaceutical drugs prices are escalating out of control and there are many entities that play a role, including pharmaceutical manufacturers and pharmacy benefit managers.”

A pharmacy benefit manager, or PBM, is contracted by health care providers to help manage prescription drug benefit programs, like Medicare Part D. PBMs often negotiate discounts and rebates with drug manufacturers. Two goliath PBMs are Express Scripts and Medco, names likely known to those who have regular prescriptions. The former has been named as a defendant in a lawsuit over an alleged insulin pricing scheme, the St. Louis Business Journal reported last month.

According to Wood’s press release, the three largest PBMs manage prescription drug coverage to more than 180 million (about 78 percent of) Americans. In 2014, the combined revenues of the three largest PBMs exceeded $270 billion, the release said.

“With that kind of revenue and no oversight, that’s a big concern for me,” said Wood. “If the PBMs are, in fact, negotiating the best pricing and doing right by consumers, they should have no concern with us ‘looking under the hood.’”

Wood claims the practice by PBMs of merging with drug companies and large pharmacy chains and establishing their own specialty pharmacies can lead to them steering patients to their own pharmacies, which is a conflict of interest.

“That narrowing of the market is concerning enough,” said Wood, “but combine that with not being regulated, and you get a mysterious black box that is in desperate need of oversight and transparency so that we can understand how their business model works and how it affects consumers.”

Assembly Bill 315 aims to impose regulations on PBMs to prevent them from engaging in those unsavory practices. It moves on for approval by the Assembly Appropriations Committee.

The bill to ban the use of drug manufacturer coupons for brand name drugs that have a generic counterpart, Assembly Bill 265, was introduced by Wood in an attempt to reduce long-term costs associated with the coupons, which show up in the form of higher premiums by encouraging people to keep choosing the more expensive option, according to the release. That bill will go before the Assembly Appropriations Committee, as well.